Income risk in property valuation for loan security purposes

Ewelina Nawrocka

Abstract

Under the provisions of the standard Valuation to Secure Debt made by the Polish Federation of Valuers’ Associations, in preparing the appraisal report for this purpose, the valuer, among other things, is “obligated to identify risk areas related to the property concerned, including the anticipated changes in the property market and the risk related to how the property is assessed by investors”. The article discusses the assessment of the risk of incomes generated by a commercial property which is to constitute loan security. Factors influencing the variability of incomes taken into consideration in the income approach to property valuation are subject to detailed analysis. The article analyses the assessment of the risk of earning income different from that expected from the property constituting loan security with the use of statistical measures. The main purpose of the article is to propose the application of statistical measures for income risk assessment. Auxiliary goals are listing the factors which influence the variability of incomes in property valuation and characteristic features of modern office space in the Polish Tricity (i.e. Gdansk, Sopot, Gdynia) near the Baltic Sea, with the analysis of rents and vacancies. The article analyzes data from the Tricity property market over the period 2009 – 2016.
Author Ewelina Nawrocka (FM / DIRE / REU)
Ewelina Nawrocka,,
- Real Estate Unit
Journal seriesReal Estate Management and Valuation, ISSN 1733-2478, e-ISSN 2300-5289 [2300-5289], (B 12 pkt)
Issue year2018
Vol26
No2
Pages12-22
Publication size in sheets1
Keywords in Englishrisk, income, commercial property, valuation, loan
DOIDOI:10.2478/remav-2018-0012
URL https://www.degruyter.com/view/j/remav.2018.26.issue-2/remav-2018-0012/remav-2018-0012.xml
Languageen angielski
LicenseJournal (articles only); published final; Uznanie Autorstwa - Użycie Niekomercyjne - Bez utworów zależnych (CC-BY-NC-ND); with publication
Score (nominal)12
ScoreMinisterial score = 12.0, 31-07-2018, ArticleFromJournal
Ministerial score (2013-2016) = 12.0, 31-07-2018, ArticleFromJournal
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